Yen Rally Getting a Bit Extended
Yen is enjoying its longest and strongest rally since the financial crisis, however that rally is looking a bit stretch now in the very near term and there could be short covering in USD/JPY, if equities rally or Dollar strengthens.
For the past six days Yen has rallied strongly against Dollar, which is its longest winning stretch since 2012, when it rallied for seven consecutive days, however back in 2012 Yen strengthened only 1.56% in seven day long rally and in 2011 it rallies 1.5% in seven days. But this time around it has strengthened around 4.4%, which is highest since 27th December 2007 to 4th January 2008, when in seven days’ rally it strengthened 5.3%.
As it can be seen that this kind of stretch-out is not common in Yen, it is only fair to for some profit bookings here and wait for next round to go short probably at a better rate.
Recent Yen rally was fuelled by weakness in Nikkei and weakness in Dollar.
While the former is still in doldrums, it is nevertheless showing some signs of comeback. In addition to that Dollar index, which is value of Dollar against a basket of currencies including Yen is close to key support area.
Yen is currently trading at 108.11 per Dollar.
The material has been provided by InstaForex Company - www.instaforex.com